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Registration number: 02264844

Spunalloys Limited

Annual Report and Financial Statements

for the Year Ended 30 June 2023

 

Spunalloys Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 10

Profit and Loss Account and Statement of Retained Earnings

11

Balance Sheet

12

Statement of Cash Flows

13

Notes to the Financial Statements

14 to 27

 

Spunalloys Limited

Company Information

Directors

Mr Michael James Richards

Mr Robert John Salisbury

Mr James Michael Salisbury

Registered office

Doulton Road
Cradley Heath
West Midlands
B64 5QS

Auditors

Walker Hubble
5 Parsons Street
Dudley
West Midlands
DY1 1JJ

 

Spunalloys Limited

Strategic Report for the Year Ended 30 June 2023

The directors present their strategic report for the year ended 30 June 2023.

Principal activity

The principal activity of the company is the manufacture and sale of ferrous and non-ferrous centrifugal castings and provision of finish machining activities.

Fair review of the business

The financial year ending 30 June 2023 was another profitable year albeit a reduction when compared to the prior year. Revenue increased by 8%, but this was essentially due to price inflation necessary to recover an increasing cost base. This is particularly applicable to the cost of energy which was 2.8 times greater than the previous financial year.

The re-opening of the global economy post Covid-19 continued to have an improving effect on the Company’s export revenues which were up 85% compared to the previous financial year. The prior year was already an improvement on the 2021 year-end of 70%, when the worldwide lockdowns were having their peak impact on the global economy. However, delays to the production release of some of the larger naval contracts did see a contraction in the UK sales. The impact of this and the commercially competitive nature of the European export work also led to the sales mix delivering a lower gross profit margin.

The Company’s order intake finished the year strong, with the overall order value taken on in the financial year being over £1m greater than the previous financial year. The Directors therefore expect the Company to continue to perform profitably in the forthcoming year. Further, releases of contracted naval work to production and expected penetration of the US naval market should lead to a positive impact on gross margin.

The company's key financial and other performance indicators during the year were as follows:

Financial KPIs

Unit

2023

2022

Turnover

£

13,759,206

12,743,444

Turnover per employee

£

147,948

140,038

Gross Profit

£

2,565,448

3,344,790

Gross Profit %

%

19

26

EBITDA (before exceptional items)

£

1,063,867

1,904,581

EBITDA %

%

8

15

 

Spunalloys Limited

Strategic Report for the Year Ended 30 June 2023 (continued)

Principal risks and uncertainties

The management continually monitors the key risk factors facing the business as well as assessing the controls used for managing these risks.

The Company's demand is influenced by external factors within the marketplaces it serves. For example, demand within the oil and gas markets, one of the markets the business serves, is materially linked to the price of oil, which fluctuates for lots of reasons including geo-political factors. The business adopts a diversified approach serving several different geographic and industry markets which manages the risk of exposure to demand fluctuations in one specific market.

A significant proportion of the Company's turnover is to export markets. Fluctuating exchange rates therefore provide the business with competitive advantages and disadvantages depending upon the relative strength of the pound. This area of risk is also managed through appropriate use of exchange rate hedging strategies.

The metal content of the Company's products expose it to fluctuations in metal prices. The Company manages this by purchasing strategies and sales contracts linked to material prices.

The Company's operations involve typical health and safety hazards inherent in manufacturing and business operations. The Company is subject to numerous laws and regulations relating to health and safety around the world. Hazards are managed by attending training courses, carrying out risk assessments, introducing appropriate controls and monitoring of activity.

Approved and authorised by the Board on 20 February 2024 and signed on its behalf by:
 

.........................................
Mr Michael James Richards
Director

 

Spunalloys Limited

Directors' Report for the Year Ended 30 June 2023

The directors present their report and the financial statements for the year ended 30 June 2023.

Directors of the company

The directors who held office during the year were as follows:

Mr Michael James Richards

Mr Robert John Salisbury

Mr James Michael Salisbury

Financial instruments

Objectives and policies

The company's activities expose it to a number of financial risks including price risk, credit risk, cash flow risk and liquidity risk. The use of financial derivatives is governed by the company's policies approved by the board of directors, which provide written principles on the use of financial derivatives to manage these risks. The company does not use derivative financial instruments for speculative purposes.

Price risk, credit risk, liquidity risk and cash flow risk

Price risk:
The company is exposed to commodity price risk. The company manages its exposure to commodity price risk where it is considered financially appropriate, presently this is only in respect of metal purchasing.

Credit risk:
The company's principle financial assets are bank balances and cash, trade and other receivables.
The company's credit risk is primarily attributable to trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance is made where there is an identifiable loss event which, based on previous experience, is evidence of a reduction in recoverable cash flows.
The company has no significant concentration of credit risk, with exposure spread over a large number of customers.

Liquidity risk:
The company has funded and intends to continue funding its ongoing operations and future developments through cash generated from operating activities and secured bank borrowings.

Cash flow risk:
The company is not significantly exposed to the risk of foreign currency exchange rates. Interest bearing assets are held at fixed rates to ensure certainty of cash flows.

Environmental matters

We have considered the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures when preparing this report. These recommendations encourage businesses to increase disclosure of climate related information, with an emphasis on financial disclosure. The Company considers the environment as a core value of the Company. The Company has an approved environmental policy which sets out the guiding principles which it must adopt and observe. Under this policy the Company pursues clear strategic goals, taking into account the available technologies and resources, with the aim of progressively improving environmental performance.

 

Spunalloys Limited

Directors' Report for the Year Ended 30 June 2023 (continued)

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Reappointment of auditors

The auditors Walker Hubble are deemed to be reappointed under section 487(2) of the Companies Act 2006.

Approved and authorised by the Board on 20 February 2024 and signed on its behalf by:
 

.........................................
Mr Michael James Richards
Director

 

Spunalloys Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Spunalloys Limited

Independent Auditor's Report to the Members of Spunalloys Limited

Opinion

We have audited the financial statements of Spunalloys Limited (the 'company') for the year ended 30 June 2023, which comprise the Profit and Loss Account and Statement of Retained Earnings, Balance Sheet, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

 

Spunalloys Limited

Independent Auditor's Report to the Members of Spunalloys Limited (continued)

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities [set out on page 6], the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor Responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

We identified and assessed the risks of material misstatement in respect of irregularities, including fraud and non compliance with laws and regulations, Our procedures included enquiry of management and performing analytical review procedures to identify any unusual relationships that may indicate a material misstatement. We also tested the appropriateness of journals to assess the risk of fraud through management override of controls. We performed appropriate testing in respect of the risk of fraud in revenue recognition through a review of margins, sales cut off procedures and by performing existence and valuation testing on trade debtors.

Relevant laws and regulations, together with potential fraud risks, were communicated to the audit engagement team at the planning stage to ensure they remained alert to any indications of fraud or non compliance with laws and regulations throughout the audit.

 

Spunalloys Limited

Independent Auditor's Report to the Members of Spunalloys Limited (continued)

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

Spunalloys Limited

Independent Auditor's Report to the Members of Spunalloys Limited (continued)

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Gavin R Pearson (Senior Statutory Auditor)
For and on behalf of Walker Hubble, Statutory Auditor

5 Parsons Street
Dudley
West Midlands
DY1 1JJ

20 February 2024

 

Spunalloys Limited

Profit and Loss Account and Statement of Retained Earnings
for the Year Ended 30 June 2023

Note

2023
£

2022
£

Turnover

3

13,759,206

12,743,444

Cost of sales

 

(11,193,758)

(9,398,654)

Gross profit

 

2,565,448

3,344,790

Administrative expenses

 

(2,391,783)

(2,104,105)

Operating profit

5

173,665

1,240,685

Other interest receivable and similar income

7

630

522

Interest payable and similar charges

8

277,944

95,151

 

278,574

95,673

Profit before tax

 

452,239

1,336,358

Taxation

12

189,326

(13,835)

Profit for the financial year

 

641,565

1,322,523

Retained earnings brought forward

 

5,829,581

4,507,058

Retained earnings carried forward

 

6,471,146

5,829,581

 

Spunalloys Limited

(Registration number: 02264844)
Balance Sheet as at 30 June 2023

Note

2023
£

2022
£

Fixed assets

 

Tangible assets

13

2,714,838

2,592,883

Current assets

 

Stocks

14

4,551,438

4,554,442

Debtors

15

3,325,425

3,772,436

Cash at bank and in hand

 

244,520

379,362

 

8,121,383

8,706,240

Creditors: Amounts falling due within one year

17

(3,296,884)

(4,247,029)

Net current assets

 

4,824,499

4,459,211

Total assets less current liabilities

 

7,539,337

7,052,094

Creditors: Amounts falling due after more than one year

17

(287,105)

(499,005)

Provisions for liabilities

18

(561,086)

(503,508)

Net assets

 

6,691,146

6,049,581

Capital and reserves

 

Called up share capital

87,500

87,500

Share premium reserve

102,500

102,500

Capital redemption reserve

30,000

30,000

Retained earnings

6,471,146

5,829,581

Shareholders' funds

 

6,691,146

6,049,581

Approved and authorised by the Board on 20 February 2024 and signed on its behalf by:
 

.........................................
Mr James Michael Salisbury
Director

 

Spunalloys Limited

Statement of Cash Flows for the Year Ended 30 June 2023

Note

2023
£

2022
£

Cash flows from operating activities

Profit for the year

 

641,565

1,322,523

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

592,607

557,063

Profit on disposal of tangible assets

4

(4,167)

(2,500)

Finance income

7

(630)

(522)

Finance costs

8

23,818

14,182

Income tax expense

12

(189,326)

13,835

 

1,063,867

1,904,581

Working capital adjustments

 

Decrease/(increase) in stocks

14

3,004

(370,491)

Decrease/(increase) in trade debtors

15

573,060

(496,651)

(Decrease)/increase in trade creditors

17

(1,249,549)

850,205

Cash generated from operations

 

390,382

1,887,644

Income taxes received

12

120,855

99,323

Net cash flow from operating activities

 

511,237

1,986,967

Cash flows from investing activities

 

Interest received

7

630

522

Acquisitions of tangible assets

(714,561)

(968,982)

Proceeds from sale of tangible assets

 

4,167

2,500

Net cash flows from investing activities

 

(709,764)

(965,960)

Cash flows from financing activities

 

Interest paid

8

(23,818)

(14,182)

Proceeds from other borrowing draw downs

 

-

372,000

Payments to finance lease creditors

 

(208,275)

(187,720)

Net cash flows from financing activities

 

(232,093)

170,098

Net (decrease)/increase in cash and cash equivalents

 

(430,620)

1,191,105

Cash and cash equivalents at 1 July

 

281,141

(909,964)

Cash and cash equivalents at 30 June

 

(149,479)

281,141

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

1

General information

The company is a private company limited by share capital, incorporated in England.

The address of its registered office is:
Doulton Road
Cradley Heath
West Midlands
B64 5QS

The principal place of business is:
Doulton Road
Cradley Heath
West Midlands
B64 5QS

These financial statements were authorised for issue by the Board on 20 February 2024.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Going concern

The financial statements have been prepared on a going concern basis.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.

Government grants

Government Grants are credited to the Statement of Profit and Loss and Other Comprehensive Income in the financial period in which they have been received so as to match them with the expenditure to which they relate.

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

2

Accounting policies (continued)

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Plant and machinery

over 5 to 10 years straight line

Fixtures fittings and equipment

over 3 to 10 years straight line

Motor vehicles

over 4 years straight line

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

2

Accounting policies (continued)

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

2

Accounting policies (continued)

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the profit and loss account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classification
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
 Recognition and measurement
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
 Impairment
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reported end date.
Financial guarantee contracts
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price and subsequently carried at amortisation cost, using the effective interest rate method. Financial liabilities classified as payable within one year are not amortised.

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

3

Turnover

The analysis of the company's Turnover for the year from continuing operations is as follows:

2023
£

2022
£

Sale of goods

13,759,206

12,743,444

The analysis of the company's Turnover for the year by market is as follows:

2023
£

2022
£

UK

6,117,619

8,617,820

Europe

5,024,322

2,659,245

Rest of world

2,617,265

1,466,379

13,759,206

12,743,444

4

Other gains and losses

The analysis of the company's other gains and losses for the year is as follows:

2023
£

2022
£

Gain on disposal of Tangible assets

4,167

2,500

5

Operating profit

Arrived at after charging/(crediting)

2023
£

2022
£

Depreciation expense

592,607

557,063

Operating lease expense - plant and machinery

75,281

71,273

Profit on disposal of property, plant and equipment

(4,167)

(2,500)

6

Government grants

Government Grants are credited to the Statement of Profit and Loss and Other Comprehensive Income in the financial period in which they have been received so as to match them with the expenditure to which they relate.

The amount of grants recognised in the financial statements was £Nil (2022 - £Nil).

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

7

Other interest receivable and similar income

2023
£

2022
£

Interest income on bank deposits

-

522

Other finance income

630

-

630

522

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

8

Interest payable and similar expenses

2023
£

2022
£

Interest on obligations under finance leases and hire purchase contracts

23,818

14,182

Foreign exchange gains

(301,762)

(109,333)

(277,944)

(95,151)

9

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

2022
£

Wages and salaries

3,301,691

2,918,608

Social security costs

310,077

274,553

Pension costs, defined contribution scheme

87,543

71,407

Other employee expense

40,379

23,245

3,739,690

3,287,813

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Production

80

78

Administration and support

13

13

93

91

10

Directors' remuneration

There has been no directors remuneration included in the financial statements for this year or the previous year, the remuneration of the directors is disclosed in the financial statements of the ultimate controlling party Musgrave Holdings Limited.

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

11

Auditors' remuneration

2023
£

2022
£

Audit of the financial statements

5,900

5,600

Other fees to auditors

Taxation compliance services

1,630

1,560

All other assurance services

1,770

1,671

3,400

3,231


 

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

12

Taxation

Tax charged/(credited) in the profit and loss account

2023
£

2022
£

Current taxation

UK corporation tax

(205,606)

(121,486)

UK corporation tax adjustment to prior periods

(41,298)

-

(246,904)

(121,486)

Deferred taxation

Arising from origination and reversal of timing differences

47,246

102,844

Arising from changes in tax rates and laws

10,332

32,477

Total deferred taxation

57,578

135,321

Tax (receipt)/expense in the income statement

(189,326)

13,835

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2022 - the same as the standard rate of corporation tax in the UK) of 20.5% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Profit before tax

452,239

1,336,358

Corporation tax at standard rate

92,691

253,908

Effect of revenues exempt from taxation

(648,893)

(548,976)

Effect of expense not deductible in determining taxable profit (tax loss)

323,442

238,723

Effect of tax losses

280,006

159,189

Deferred tax expense relating to changes in tax rates or laws

10,332

32,477

Decrease from effect of tax incentives

(41,298)

-

Tax decrease from effect of adjustment in research and development tax credit

(205,606)

(121,486)

Total tax (credit)/charge

(189,326)

13,835

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

13

Tangible assets

Fixtures and fittings
£

Plant and machinery
£

Motor vehicles
 £

Total
£

Cost or valuation

At 1 July 2022

475,951

7,804,221

13,109

8,293,281

Additions

201,947

512,614

-

714,561

Disposals

-

(6,350)

-

(6,350)

At 30 June 2023

677,898

8,310,485

13,109

9,001,492

Depreciation

At 1 July 2022

316,473

5,370,816

13,109

5,700,398

Charge for the year

60,306

532,300

-

592,606

Eliminated on disposal

-

(6,350)

-

(6,350)

At 30 June 2023

376,779

5,896,766

13,109

6,286,654

Carrying amount

At 30 June 2023

301,119

2,413,719

-

2,714,838

At 30 June 2022

159,478

2,433,405

-

2,592,883

14

Stocks

2023
£

2022
£

Raw materials and consumables

3,076,860

3,330,899

Work in progress

1,419,898

1,165,334

Finished goods and goods for resale

54,680

58,209

4,551,438

4,554,442

15

Debtors

Current

Note

2023
£

2022
£

Trade debtors

 

1,621,362

2,007,896

Amounts owed by related parties

24

1,075,047

1,185,067

Other debtors

 

203,043

295,664

Prepayments

 

178,438

162,323

Income tax asset

12

247,535

121,486

   

3,325,425

3,772,436

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

16

Cash and cash equivalents

2023
£

2022
£

Cash on hand

385

760

Cash at bank

244,135

378,602

244,520

379,362

Bank overdrafts

(393,999)

(98,221)

Cash and cash equivalents in statement of cash flows

(149,479)

281,141

17

Creditors

Note

2023
£

2022
£

Due within one year

 

Loans and borrowings

21

609,527

310,124

Trade creditors

 

1,992,126

2,520,902

Amounts due to related parties

24

-

1,011,322

Social security and other taxes

 

91,695

75,486

Outstanding defined contribution pension costs

 

22,316

17,389

Other payables

 

221,027

80,001

Accruals

 

360,193

231,805

 

3,296,884

4,247,029

Due after one year

 

Loans and borrowings

21

287,105

499,005

18

Provisions for liabilities

Deferred tax
£

Total
£

At 1 July 2022

503,508

503,508

Increase (decrease) in existing provisions

57,578

57,578

At 30 June 2023

561,086

561,086

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

19

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £87,543 (2022 - £71,407).

Contributions totalling £22,316 (2022 - £17,389) were payable to the scheme at the end of the year and are included in creditors.

20

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

Ordinary Shares of £1 each

87,500

87,500

87,500

87,500

         

21

Loans and borrowings

2023
£

2022
£

Non-current loans and borrowings

Hire purchase contracts

287,105

499,005

2023
£

2022
£

Current loans and borrowings

Bank overdrafts

393,999

98,221

Hire purchase contracts

215,528

211,903

609,527

310,124

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

22

Obligations under leases and hire purchase contracts

Finance leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

211,903

211,903

Later than one year and not later than five years

287,100

499,005

499,003

710,908

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

20,247

20,715

Later than one year and not later than five years

4,025

24,272

24,272

44,987

The amount of non-cancellable operating lease payments recognised as an expense during the year was £75,281 (2022 - £71,275).

23

Commitments

Capital commitments

The company's development plans call for capital expenditure to enhance production capability and capacity.
The total amount contracted for but not provided in the financial statements was £420,000 (2022 - £Nil).

24

Related party transactions

Summary of transactions with parent

The company has taken advantage of the exemption in FRS 102 "Related Party Disclosures" from disclosing transactions with its parent company.
 

Summary of transactions with subsidiaries

The company has taken advantage of the exemption in FRS 102 "Related Party Disclosures" from disclosing transactions with its fellow subsidiary companies.
 

 

Spunalloys Limited

Notes to the Financial Statements for the Year Ended 30 June 2023 (continued)

25

Parent and ultimate parent undertaking

The company's immediate parent is Westley Group Limited, incorporated in England.

 The ultimate parent is Musgrave Holdings Limited, incorporated in England.

  These financial statements are available upon request from
Doulton Road
Cradley Heath
West Midlands
B64 5QS